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Private investors top City pros says Capita

Private investors were better prepared for the correction in the UK stock markets in the second half of July and the beginning of August than professionals, according to Capita.

Capita research shows private investors sold a net £5.9bn of their equity holdings prior to the crisis, reducing their share of UK Plc from 12.15 per cent to 11.96 per cent.

They also sold £8bn of cyclical shares and bought £2.1bn of defensive stocks, whose profits and share prices tend to be less affected by bad economic news and financial market disturbances.

Capita Registrars director John Roundhill says for several months research has shown a steady sell trend by private investors and a refocusing on defensive stocks.

“We pin-pointed in June that their nervousness suggested a correction was imminent. Their strategy has proved itself very sound. When the turmoil began to hit in the middle of July, private investors were ready for it.

“Our figures demonstrate that the conventional wisdom, that private investors sell at the bottom and buy at the top, is simply not true. Although private investor activity alone will not drive the market in any particular direction, their behaviour clearly should not be ignored.”

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